Sistema to shut operations in 10 circles ahead of spectrum auction

The shutting down of operations will affect about 2.2 million subscribers, or around 15% of the company’s subscriber base of 14 million. Photo: HT

Updated: Fri, Feb 22 2013. 12 03 AM IST

New Delhi: Sistema Shyam TeleServices Ltd (SSTL), the only operator offering services on the CDMA platform affected by the Supreme Court’s order to cancel telecom licences, said it will shutter operations in 10 areas to shore up finances ahead of the March radio spectrum auction.

The Gurgaon-based SSTL was among nine companies affected by the February 2012 ruling that cancelled 122 telecom licences and airwaves allocated in January 2008 on the grounds that the allotment procedure was flawed. The court ordered the spectrum be auctioned by the government. SSTL lost 21 of its 22 licences.

“Over the last one year, the uncertainties resulting from such cancellation has compelled the company to conserve it’s resources and initiate the process to inform its customers in 10 circles, i.e., Assam, Andhra Pradesh, Bihar, Himachal Pradesh, Haryana, Jammu and Kashmir, Madhya Pradesh, North East, Orissa and Punjab, to port out to other telecom operators of their choice,” SSTL said in a statement on Thursday. “The decision comes at a time when the company is drawing a new blueprint for growth, making it future-ready.”

The shutting of operations aims to strengthen the company’s MTS brand and sharpen focus on data-centric, voice-enabled strategy.

“The intent is to now look at life beyond all the uncertainties and build an even stronger MTS brand in India. The go-forward plan includes continuing with the company’s focus on its data-centric, voice-enabled strategy in select circles,” said Vsevolod Rozanov, president and chief executive of SSTL.

The shutting of operations will impact less than 300 employees, or 10% of the total. The company is trying to relocate them to other service areas or partner companies. The move also affects about 2.2 million subscribers, or around 15% of its subscriber base of 14 million. The customers have 30 days to move to a another telecom network.

Prior to the November auction, Uninor, another company affected by the Supreme Court ruling, had also taken similar steps to boost revenues by exiting money-losing circles and reducing costs. Uninor retained its licences in six circles post the auction. These include Goa, Gujarat, Uttar Pradesh east and west, Bihar and Jharkhand and Andhra Pradesh.